Portfolio

Let’s be honest. I suck at keeping this up to date. So take anything on this page with a grain of salt. Feel free to reach out to discuss any positions below.

Canadian Stocks

  • Omni-Lite Industries (OML.v)
  • Sangoma Technologies (STC.v)
  • Avante Logixx (XX.v)
  • XPEL Technologies (DAP/U.v)
  • Pulse Seismic (PSD.to)
  • High Arctic Energy Services (HWO.to)

American Stocks

  • Elbit Vision Systems (EVNSF)
  • Transcat Inc. (TRNS)
  • Command Center (CCNI)

7 responses to “Portfolio

  1. Michael

    You almost bought HSE. It got bought out. (I almost bought that stock at $0.60).

    You just missed Hyduke. And well it happened again. I only spotted HYD thanks to your blog, and liked it (and bought some).

    You do good work.

    Would you tell me which are your core stocks?

    We’ve spoken about MXG and ERD – the two stocks have significant catalysts which will come near the end of the year – I believe there’s some real money to be made in those two.

  2. Michael

    You were looking at ZCL a couple of months ago. I just looked into it – Q1 was a great quarter; good top line growth, margin improvement, and significant build in backlog. Truthfully, I think management guidance is a touch too soft.

    Even though the stock has had a decent run, I would buy it. I’ll look for an entry price at 3.80 ish.

    • Thanks for the comment.

      I haven’t looked at ZCL in a while. I’ll plug the most recent q in and let you know what I think. Do you feel that revenue growth will continue for the next 12-18 months?

      I did look at MXG. The catalyst is clear (coal mine). Same for ERD. The thesis makes sense on both of them. My concern is how little I know about the overall industry and the underlying drivers.

      As for HYD. I’m kicking myself (again) for not buying. I feel that I need to make the same mistake several times before I actually learn a lesson. Hopefully that gets driven out of me at some point.

      As for core holdings…right now it’s SO, FTP, and EFH (all Canadian). I have been finding some value in smaller names, but I lack the conviction to make them major holdings. I hope to do a write-up on some of them soon.

      Feel free to reply or shoot me an email.

      Dean

  3. Michael

    Dean,

    ZCL is unfolding as a great small-cap turnaround story. Profitability, revenues and backlog all beat expectations and grew handily in Q1. Management is guiding for 10%-15% revenue growth and EBITDA margins of 12%-15%. Profitability has improved and backlog is at record levels making these numbers very reasonable. I believe ZCL could generate about $0.40-$0.50 in earnings in 2013 (let’s use $0.45) and could have a net cash position of $0.75 – giving this a 12x EPS valuation plus cash I get a $6.20 one-year target. Finally, I believe ZCL could see some M&A as it has a solid balance sheet and could finance a decent sized deal or even get bought out. I would buy a small position in this one – looking for $3.75 as entry.

    It’s hard to comment on the macro conditions of this company as it’s manufacturing is so niche. But I would feel comfortable, so long as oil remains above $80 and the economy doesn’t get flushed away – I believe we only see better numbers from these guys.

  4. Michael

    McCoy, I believe, has even more value.

    Strictly looking at financials – by 2013, I expect the company to have $1.40 of cash on the balance sheet and generate about $0.50 of EPS and FCF. Meaning at $4.00, the company trades at 5x P/E ex cash while most of its comps trade at 12x. I assume the cheap valuation is due to the low volume and significant ownership by Foundation Equity Corp. It would be a positive catalyst if they sold a portion of their holdings.

    On a business level – they have two segments, one of which (Mobile solutions) i hope they sell off. They could sell it off for 4x EBITDA and command a higher valuation for the less cyclical Energy Products & Services segment.

    On a macro level, the end markets are looking really strong in the long-term with international growth doing most of the heavy lifting. The office in houston is well positioned to sell to latin american and brazilian clients which could become very interesting for the company.

    I also believe the company could actively seek to become a target (venture capital firm exit) or do M&A and use the FCF and cash balance.

    Another good find.

  5. Michael

    Now on Erdene.

    I bought this stock at $0.35 and it’s just hurting to see it go this low.\

    The mine in which the company owns a 25% stake was given a valuation of $1 billion. Also the company has mongolian assets which you could argue is worth $50 million. Yet the company has a market cap of $20 million.

    Some argue that there is no way the mine is worth that much. I would tend to agree as well. However, it’s not much less. When the study of the mine was completed thermal coal was trading higher but met coal was trading lower – and most of the coal (~80%) is met coal. The discount was 8%, which I would assume is a little too low. And the costs were potentially underestimated. So let’s say the mine is worth $600, Erdene’s stake is worth atleast $150. Keep note that the local government is supporting this project and I believe could “subsidize” it.

    Also, management is looking to spin off the mongolian assets, which should atleast go for $0.20…even in this market.

    Together you’ve got a stock worth over $1.00…yet it’s trading at $0.20.

    As for Maxim, it’s even easier. They intend to sell a mine which is worth $1.00 per share that the market gives zero value to.

    I expect both of these catalyst to occur in November…hoping for big returns :)!

  6. canadianmdinvestor

    It strikes me that you do not own any large cap stocks.

    Obviously, this is intentional. Wow, gutsy….

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